IRELAND: Ireland is considering repurposing the country's "bad bank" into a development agency that could deliver housing on behalf of the state and help ease a major supply problem, Prime Minister Leo Varadkar said on Thursday.

A severe shortage of housing combined with surging demand in Ireland's fast-recovering economy has caused house prices to rise sharply, pushed residential rents in cities above their "Celtic Tiger" economy peak and led to a surge in homelessness.

The National Asset Management Agency (NAMA), which was set up in 2009 to rid local banks of loans related to Ireland's property crash, has almost repaid the more than 30 billion euros it borrowed to purchase the risky loans.

NAMA was tasked in 2015 with building 20,000 new homes on its sites, as well as developing a major new business district on Dublin docklands. Varadkar indicated on Thursday that it may have a further role to play as the state seeks to increase the construction of social housing from current low levels.

"We are examining the possibility of repurposing NAMA to develop plans on behalf of the state and step in where the private sector has failed," Varadkar said in a speech at a two-day meeting of his Fine Gael parliamentary party.

Varadkar also said that the government would shortly announce changes to planning regulations that would make it more affordable to build apartments..

The government has pledged to double housing output to 25,000 by 2019 but some analysts say as many as 50,000 units could be needed per annum to make up the current deficit. Census data in April meanwhile suggested that official figures for housing completions overstate the true level of homebuilding.